If S = national saving, I = private investment and NFI = net foreign investments, then:
A)S + I = NFI.
B)S = I + NFI.
C)S = I - NFI.
D)S + NFI = I.

Question

Quizplus · Accepted Answer

National saving (S) is equal to private investment (I) plus net foreign investment (NFI). This is because national saving represents the total amount of income that is not consumed by households, which can either be invested domestically or borrowed from abroad (NFI). Therefore, the correct equation is S = I + NFI.

If S = National Saving, I = Private Investment and NFI